Did your loan application get rejected? Are you having to pay higher interest rates on your loan? Your CIBIL score could be a major reason for it. For those who are unfamiliar, CIBIL score – a credit score by the bureau called CIBIL, is one of the deciding factors for sanctioning a loan. It is the most popular credit scoring bureau in India referred by lenders to approve or reject loan applications. Now that the context is set, let us answer some of the most frequently asked questions on CIBIL score for loan.
FAQs about CIBIL or Credit Score
CIBIL score, denoted by a three-digit number, reflects the borrower’s credit profile and a summary of his/her credit history. On the other hand, the CIBIL report by the Credit Bureau is a compilation of all the credit-related activities of individuals/companies.
CIBIL score for loan acts as the first impression for the lender. Once the loan applications are submitted, the lender will check your score and then go through the reports to analyze whether or not you are worthy of financial aid. The higher the score, the better your chances of getting the loan sanctioned.
The CIBIL score typically ranges from 300 to 900. However, the ideal score for easy, quick home loan approval should be anything over 750.
The major factors that affect CIBIL score include the borrower’s poor payment history, a poor mix of credit, high credit utilization, and multiple loan enquiries, among others.
Credit institutions usually take between 30 and 45 days to submit data to the Credit Information Bureau (India) Limited. However, if you purchase your credit report within 45 days of the last due payment, it may not be updated. This reflects an amount overdue or inaccurate balance in the CIBIL report.
Clearing dues and other liabilities is certainly a great move to improve your CIBIL score. However, it will take a few months for the improvement to reflect in the report. You could ask your lender to send you monthly updates regarding the status of the loan and payments.
A borrower can raise a dispute in the CIBIL score or report under the following circumstances –
- Duplicate account
- Inaccuracy in the payment history
- Inaccurate overdue
- Discrepancies in ownership (for example – a loan wrongly tagged against your name)
Borrowers can check their CIBIL score by accessing the CIBIL score calculator for free on the lender’s website.
You can boost your CIBIL score for a loan by maintaining a good credit history. Following these steps will help you improve your score –
- Paying your dues on time
- Maintaining a healthy credit mix
- Moderately applying for new credit
- Keeping track of your guaranteed, co-signed, joint accounts every month
- Frequently reviewing the credit report all year round
A credit score, less than 750 is considered not good. If your credit score falls below this, you will have to adopt concrete measures to better it. A bad credit score will make you ineligible for loans and credit cards.
Normally it takes about 4 to 12 months to increase a credit score. With a poor CIBIL score, typically less than 600, it will naturally take time to get it up to 700-750.
The highest credit score can be 900, which denotes the maximum creditworthiness of a borrower.
Yes, there are lenders who lend even at a credit score of 650. However, they may offer you a plan after going through your other financial details and eligibility parameters.
*Terms and conditions apply.
